A Comprehensive Guide to Public Liability Insurance

Written by 
Thomas Perrotta
Thomas Perrotta is the managing editor of Savvy. Throughout his time at the company, Thomas has specialised in personal finance, namely car, personal and small loans, although he has also written on topics ranging from mortgages to business loans to banking and more. Thomas graduated from the University of Adelaide with a Bachelor of Media, majoring in journalism, and has previously had his work published in The Advertiser.
Our authors
, updated on February 28th, 2024       

Fact checked

At Savvy, we are committed to providing accurate information. Our content undergoes a rigorous process of fact-checking before it is published. Learn more about our editorial policy.

Business Insurance Banner - Electrician fixing wiring in a house

Whether you're a business owner, contractor or event organiser, understanding public liability insurance is essential for protecting yourself and your assets against potential claims of property damage or personal injury.

In Savvy’s comprehensive guide, you can find out everything you need to know about public liability insurance, including what it is, how it works and why it's important. Learn more about covering your business with us today!

What is public liability insurance?

Public liability insurance is a type of insurance that provides protection for businesses and business owners against claims of property damage or personal injury caused to third parties. This insurance is particularly important for businesses that interact with the public, such as retail stores, restaurants, tradespeople and event organisers.

Having public liability insurance in place can provide financial protection and peace of mind, helping ensure that you aren’t personally liable to pay for a range of unexpected accidents or incidents that occur in connection with your business activities. All coverage will be subject to the terms and conditions of your agreement, as is the case with all insurance policies.

What does public liability insurance cover?

Three main areas are covered by a public liability insurance policy in relation to negligent business activities. These are:

Injury or death caused to a third party

In the event your business causes the injury or death of a third party as a result of your negligent practices, your public liability insurance policy can cover you. For example, if you mopped a floor but didn’t place adequate signage around a wet area and someone slipped over, you could be liable for compensation if they were injured in the incident.

Damage to, or loss of, property belonging to a third party

You can also be covered if your business activity results in the damage to or loss of property which belongs to a third party, such as a customer. For instance, if you were doing renovations in someone’s home and accidentally dropped a hammer and damaged their floor, your insurance could cover you.

Cost of legal expenses relating to a covered claim

If the third party to whom you cause injury or property damage decides to pursue action in court, your policy can also provide cover for your legal costs, which can often be very steep (especially if proceedings are drawn out over an extended period.

Some of the other areas which can be covered under your policy include:

  • Individuals acting on your business’ behalf
  • Cost of first aid administered at the site and/or time of the incident
  • Liability for products you manufacture or sell causing injury or property damage (may be included or available as a separate product liability policy)

What isn’t covered by public liability insurance?

Just as important as knowing what’s covered is what isn’t. Some of the areas that you won’t find under your public liability insurance policy include the following:

  • Damage or injury to yourself, employees or your property: public liability insurance doesn't cover injuries to yourself, your employees or damage to your property. For employee injuries, you'll need workers' compensation insurance. Damage to your business property can be covered under a more general business insurance policy.
  • Intentional or illegal acts: public liability insurance won't cover any damage or injury arising from your deliberate or illegal actions.
  • Professional advice or services: if a client suffers a loss due to negligent professional advice you provided, your public liability policy won't cover it. You'll need separate professional indemnity insurance for this.
  • Contractual disputes, fines and taxes: public liability insurance doesn't cover any financial losses arising from breaches of contract, fines imposed by authorities, or additional taxes you may be liable for.
  • Asbestos: public liability insurance excludes any claims related to asbestos exposure, contamination or removal. This is due to the high potential costs and complexities associated with asbestos-related liabilities.
  • Pollution: similar to asbestos, public liability insurance excludes coverage for pollution incidents, including environmental damage or harm caused by pollutants.

How much can I claim through my public liability insurance?

In many cases, you may be offered three different levels of public liability insurance cover: $5 million, $10 million and $20 million. The size of your claim will depend on a range of factors (most importantly the nature of the incident and the amount being claimed against you), but your insurer won’t cover any amount beyond the maximum claim limit.

How much does public liability insurance cost?

The cost of public liability insurance in Australia can vary significantly depending on several factors, including:

  • Your industry and business activities: higher-risk industries like construction or trades typically pay more than lower-risk businesses, such as office-based services.
  • Your business size and annual turnover: generally, larger businesses with higher revenue will pay more for insurance coverage. This is because there may be more moving parts (such as more employees) which could result in a claimable event.
  • Your location: insurance costs can vary depending on the state or territory you operate in, as well as whether you’re based in a metropolitan area or rurally and where you are within your specific town or city.
  • Your claims history: having a clean claims history can lead to lower premiums, while businesses with a track record of claims are likely to be charged more for coverage.
  • The level of cover you choose: higher coverage limits will naturally cost more. For instance, a policy with $5 million in cover will set you back more than a $10 million or $20 million policy.

When is public liability insurance compulsory?

In most cases, public liability insurance isn’t a requirement for businesses operating in Australia. However, there are several situations where it can become compulsory:

  • Licencing requirements: public liability insurance can be mandatory to obtain a licence for certain trades or professions in various states and territories. For example, according to WorkSafe Queensland, electricians working in Queensland require a minimum of $5 million in public liability cover as part of their electrical contractor's license.
  • Contractual obligations: public liability insurance might be mandated as a requirement in contracts you sign with clients or organisations. This is common for businesses working on government projects, construction sites, or providing services on someone else's property.
  • Lease agreements: some landlords may require tenants, especially those operating businesses on their premises, to hold public liability insurance as a condition of the lease agreement.

It’s important to check the requirements for your industry in your state or territory before you commence work or start your business, as you could be in breach of the law if you don’t have the insurance you need.

Did you find this page helpful?

Thanks for your feedback!

Compare business insurance

Learn all about business insurance then compare quotes from a range of insurers right here with Savvy.
Want to receive offers, deals and finance tips from Savvy?
Sign up below
Business Insurance Banner - Electrician fixing wiring in a house

We'd love to chat, how can we help?

By clicking "Submit", you agree to be contacted by a Savvy Agency Owner and to receive communications from Savvy which you can unsubscribe from at any time. Read our Privacy Policy.